Stephen Farry: We should monitor where redundancies are sadly occurring and utilise skills barometer to inform urgent re-skilling

I am sceptical that we will automatically see a V-shaped economic slump followed by a sharp recovery.

While this economic recession doesn’t arise from demand-related problems, ongoing problems with demand, as company failures, redundancies, ongoing risk and uncertainty may all impact on consumers’ willingness to spend.

Furthermore, any recovery may be both stop-start in nature, with certain sectors suffering a greater and longer impact than others.

These challenges come on top of existing structural weaknesses in the local economy, such as low levels of productivity and a high rate of economic inactivity.

Covid-19 also exposes the vulnerabilities of too much emphasis on labour market flexibility rather than investing in skills.

Essentially, the current economic interventions from the UK government and the NI executive are about seeking to contain and protect the economy. But attention needs to turn to the economic recovery plan.

The key fiscal and monetary levers to pump-prime demand and to provide further ongoing support to the most affected sectors lie with the UK government and the Bank of England.

Lessons must be learnt from the response to the financial crash a decade ago.

Wider changes to taxation and the welfare system are also essential. In that regard, I am working with a range of cross-party MPs to explore a Universal Basic Income.

The NI executive must take a strategic approach to its own interventions. Ideally, a revised Economic Strategy would be in place.

Resources are tight and must be used sensibly. Yet, these will not be sufficient. Therefore, either further Barnett Consequentials from the Treasury or an additional NI specific ask would be required.

Prior to this crisis, the conventional wisdom had been on focusing on re-balancing the economy through productivity change. But this must now be matched with an emphasis on rebuilding.

There are essentially three categories of businesses requiring targeted support.

• First, those most affected by either required closure or a prolonged slump in demand, such as leisure, tourism, hospitality and aspects of retail. An extended rates holiday for certain sectors is rightly the most obvious lever, but rates are still a blunt instrument.

• Second, there are sectors that are key for the effective functioning of society such as agri-food and logistics which may need support as more business models are distorted.

• And third, ongoing support must be given to those sectors most crucial to re-balancing our economy such as information technology, financial services, life sciences and advanced manufacturing.

For instance, our universities and colleges may struggle to sustain investment in crucial STEM subjects as their budgets come under pressure.

Supply and demand patterns in the local economy may see considerable disruption.

The executive should monitor where redundancies are sadly occurring, and utilise the skills barometer to inform urgent re-skilling and retraining programmes, building on schemes such as Assured Skills and Bridge to Employment.

• Stephen Farry is Alliance Party deputy leader and MP for North Down

—— ——

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

With the coronavirus lockdown having a major impact on many of our advertisers - and consequently the revenue we receive - we are more reliant than ever on you taking out a digital subscription.

Subscribe to newsletter.co.uk and enjoy unlimited access to the best Northern Ireland and UK news and information online and on our app. With a digital subscription, you can read more than 5 articles, see fewer ads, enjoy faster load times, and get access to exclusive newsletters and content. Visit https://www.newsletter.co.uk/subscriptions now to sign up.

Our journalism costs money and we rely on advertising, print and digital revenues to help to support them. By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Alistair Bushe

Editor